• Tag Archives Amazon

  • Jeff Bezos Just Endorsed Corporate Tax Hikes. Here’s Why Amazon’s Support Should Be a Giant Red Flag

    Posted on by Azrael Comment

    The Biden administration and some (but not all) of their Democratic allies in Congress want to raise the corporate tax rate to 28 percent. They say this would help the working class and hurt Big Business, finally making corporations “pay their fair share.” But if that were true, giant corporations like Amazon wouldn’t be endorsing the change. 

    Yet that’s exactly what Jeff Bezos just did. 

    “We support the Biden Administration’s focus on making bold investments in American infrastructure,” the Amazon CEO wrote in a public statement. “We recognize this investment will require concessions from all sides—both on the specifics of what’s included as well as how it gets paid for… we’re supportive of a rise in the corporate tax rate.” (Emphasis mine).

    Amazon has also lobbied aggressively for other big-government policies like a $15 federal minimum wage. At first glance, this might seem like an endorsement of the policies: see, they wouldn’t be so bad for business after all. Yet it’s actually a giant red flag. 

    When Big Business comes together to collude with Big Government, it usually means everyday people are about to get ripped off.

    When CEOs and politicians are able to agree on seemingly anti-business policies, it’s often because they know the government roadblocks instituted will entrench their market dominance and ultimately redound to the C Suite’s benefit. Amazon knows it can weather the storm of higher corporate taxes (right now it pays very little in corporate tax because it exploits tax breaks) but many of its smaller competitors cannot. Meanwhile, Bezos also knows that his company can afford armies of tax experts, accountants, and lawyers to exploit every loophole to minimize the damage; a luxury many less-dominant rivals won’t have.

    And, most importantly, a wealth of economic research shows that workers and consumers really bear the majority of the costs of corporate taxes through lower wages and higher prices. 

    “The elementary fact is that ‘business’ does not and cannot pay taxes,” Nobel Prize-winning economist Milton Friedman once explained. “Only people can pay taxes. Corporate officials may sign the check, but the money that they forward to Internal Revenue comes from the corporation’s employees, customers or stockholders.”

    More specifically, a study by the Tax Foundation found that Biden’s proposed corporate tax hike would shrink the overall size of the economy, reduce wages, and eliminate 159,000 jobs. 

    Of course, Bezos would hardly notice a blip in his bank account. The workers left unemployed would have a different experience.

    Amazon is not truly altruistic or “woke.” The company knows that the costs of proposed corporate tax hikes would mostly fall on workers and hurt smaller retail competitors. Amazon just hopes that you don’t know that—and that Americans mistake its cronyism for altruism.


    Brad Polumbo

    Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.

    This article was originally published on FEE.org. Read the original article.


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  • Data on Amazon Rainforest Fires Tell a Much Different Story Than Social Media

    Posted on by Azrael Comment

    It is hard to miss the news reports on the fire in the Amazon rainforest in Brazil. Millions of people are calling for immediate action on social media and, with a limited amount of prior knowledge, there is little surprise that much of what is being reported is inaccurate.

    A wide array of celebrities have drawn attention to the problem, mostly through tweets, ranging from superstar sportspeople to famous actors. When asked what Madonna, Christiano Ronaldo, Leonardo DiCaprio, and Emmanuel Macron have in common, you’re probably expecting a funny joke. In fact, all of these people have shared pictures about the fires online that were proven to be much older. In the case of the French president, the photograph he posted was taken by a photographer who died in 2003, making it at least 16 years old.

    Macron:

    Our house is on fire. Literally. The Amazon, the lung of our planet, which produced 20% of the world’s oxygen, is on fire. This is an international crisis. Members of the G7, let’s meet in two days to talk about this emergency. #ActForTheAmazon

    Even Pope Francis has joined the call to protect the rainforest.

    With calls such as “Save the Amazon” or “Amazon emergency,” the relevant thing to do is to put things in perspective. We know that the number of fires in Brazil this year is more than last year, but it is also about the same as 2016 and less than 2002, 2003, 2004, 2005, 2006, 2007, 2010, and 2012. Data from the National Institute for Space Research in Brazil, which works with NASA, shows that 2019 is not out of line. This data is received when analyzing satellite imagery.

    While the number of fires in 2019 is indeed 80 percent higher than in 2018—that number you have probably seen reported wildly—it’s just 7 percent higher than the average over the last 10 years. Adding to that, most fires are currently happening on already deforested land in the Amazon.

    It remains a popular myth that the Amazon is “the lung of the Earth,” producing “20% of the world’s oxygen.” In Emmanuel Macron’s tweet from above, the president repeats this exact line. In reality, both are inaccurate, and not only because your lungs don’t produce oxygen.

    But of course, the number will stay alive as long as there are media stories to be produced, including from the Associated Press (which had to retract it).

    In fact nearly all of Earth’s breathable oxygen originated in the oceans, and there is enough of it to last for millions of years. There are many reasons to be appalled by this year’s Amazon fires, but depleting Earth’s oxygen supply is not one of them,

    writes Snopes.

    So, no, you won’t suffocate because of the Amazon fires.

    It takes a minute to dawn on people with what temerity we judge Brazilian forestation from a North American or European perspective. Large forest areas comparable to the Amazon do not exist in Germany, France, Italy, or the United States, for that matter, because they were transformed into farmland and used to enrich local communities through effective land use.

    In Brazil, 80 percent of the Amazon is protected from deforestation and remains untouched. In the meantime, we also need to note that deforestation has also declined by 70 percent in recent years, and only a fraction of the land can even be used for things such as soy farming.

    Hovering above Brazilian authority over the Amazon, spreading the need for “immediate action” by misinforming the public when the leaders of the countries in question have put deforestation much further than Brazil ever has, is all quite rich. The will to fight accidental fires (which are set to increase due to climate change) is there. However, the way the debate has been held over the past weeks will disenfranchise political leaders in South America as well as the population who votes for them.

    Portraying the roughly 30 million inhabitants of the Amazon region as greedy egotistical savages who need Leonardo DiCaprio to educate them on global environmental challenges will only stoke memories of colonialism. That word is chosen with some care—modern-day environmentalism has grown into a set of rich individuals and countries telling low-income populations that they need to stay poor for the sake of international environmental safety.

    The Amazon rainforest fire debate is another edition of “abstinence vs. innovation” (here’s the aviation edition). Global agro-consumption and demand for things such as meat are said to be the cause of the problem, and within this narrative, only cutting consumption can produce positive results. That is not true. Through genetic modification and gene editing, we can identify the problems of today and solve them with the technology of today.

    In 2014, GMOs allowed farmers to use 51 million acres less land to produce the same amount of food, fiber, and fuel. Without GMOs, we would have needed an additional 22 million acres of corn, 19 million acres of soybeans, nine million acres of cotton, and 1.5 million acres of canola. We also know of wonderful scientific advances in the area of meat, where “Impossible Burgers” now deliver meatless and tasty burgers in major fast-food chains.

    The future of our civilization lies in the ingenuity of scientific research, not in the government-led reduction in consumption. We need to stop the myths about our very real environmental challenges and address the actual problem with real solutions.


    Bill Wirtz

    Bill Wirtz is a Young Voices Advocate. His work has been featured in several outlets, including Newsweek, Rare, RealClear, CityAM, Le Monde and Le Figaro. He also works as a Policy Analyst for the Consumer Choice Center.

    Learn more about him at his website.

    This article was originally published on FEE.org. Read the original article.


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  • The Government Killed Free Checking—Can Amazon Save It?

    Posted on by Azrael Comment

     

    Banking has become prohibitively expensive over recent years, especially for the poor. The number of people with free checking accounts has hit a new low, while overdraft fees continue to rise. Whereas it used to be part of the American Dream to maintain a healthy bank account, around 35 million households no longer have regular access to traditional financial services.

    It wasn’t long ago that banks would provide valuable financial products to an ever-widening margin of low-income consumers—and make a profit doing so. In 2009, 76 percent of banks offered free checking accounts. Today, that number is only 38 percent. Likewise, overdraft fees in the year 2000 were around $18. Today they are over $30.

    So what changed? Critics like to blame big banks for putting “profit over people.” But as easy as it is to point the finger at Wall Street, the real problem isn’t the banks. It’s the government.

    Regulations Are Increasing Costs

    It turns out that it’s incredibly expensive to extend financial products to the poor. According to the economic research firm Moebs Services, each checking account costs banks $349 on average, while the average revenue is only $268. A substantial portion of these costs come from the thousands of pages of regulations that banks must abide by just to be able to open an account.

    Take anti-money laundering (AML) and “know your customer” laws. The AML regime costs have risen by some 50 percent over recent years. This costs banks around $8 billion annually in compliance but leads to remarkably few convictions. A conservative analysis of the law estimates that each AML conviction costs over $7 million.

    Meanwhile, as the cost of maintaining a checking account for banks has risen, the main revenue source of these accounts dried up. An amendment to the 2010 Dodd-Frank Act from Sen. Richard Durbin (D-IL) imposed price controls on debit card “swipe fees.” The Durbin Amendment capped the price that banks could charge merchants when a customer used a bank’s debit card to purchase something from the merchant. These fees largely covered the bank’s cost of maintaining a checking account and provided the incentive for banks to issue more debit cards. But seeing that a significant and dependable source of revenue was to dry up, banks looked to cut costs and raise fees elsewhere in order to make up for it.

    The cumulative effect of regulation raising costs and reducing revenue was to push low-income consumers out of the formal financial system. At the time of the Durbin Amendment’s implementation, JP Morgan estimated that the new regulations would make 70 percent of customers with less than $100,000 unprofitable. Recent history can attest to that. Around one million people have exited the banking system because of the Durbin Amendment alone. For banks like Bank of America who recently canceled their free checking program, it simply doesn’t make sense to offer these checking accounts to low-income consumers when the account barely breaks even.

    A Possible Solution

    For the last eight years, the trend has been toward the death of free checking. But that tide might be turning, as innovative companies like Amazon look to enter the market, in partnership with banks like JPMorgan and Capital One.

    Amazon’s proposal focuses on creating a product for the unbanked—those very people who have been pushed out of the banking system by regulation. The key is that Amazon is uniquely positioned to turn the usual business model of checking accounts on its head. Whereas banks tend to rely upon overdrafts or interchange fees for revenue, Amazon may be able to leverage something even more valuable—consumer data.

    Amazon has an enormous data platform which it relies on to tailor products to its consumers. Integrating a customer’s checking account into their broader commercial infrastructure would allow the firm to analyze a customer’s shopping patterns and financial data to better tailor their products. In combination with its payment system, it would also make purchases at Amazon’s marketplace much cheaper and easier for both the customer and the firm.

    In this way, the checking account wouldn’t necessarily need to be profitable, as long as it drives more retail sales for the company, with reports suggesting that Amazon could include a checking account as part of its Prime subscription service. For a further discussion of the advantages Amazon has over its competitors, see this Bain & Co. report.

    The move into co-branded checking accounts may, therefore, be less about disrupting the financial services marketplace as it is about increasing consumer engagement with Amazon’s own platform. As for the product’s outlook, Bain and Co. predict that the service could grow to more than 70 million customers over the next five years. This is the same as the third-largest bank, Wells Fargo.

    All of this spells good news for currently under-served consumers, who often rely on relatively expensive financial services such as payday lending or check cashing. While government regulation may have just about killed free checking, a new wave of innovative tech firms like Amazon may be able to save it.

    Reprinted from the Competitive Enterprise Institute.


    Daniel Press

    Daniel Press is a policy analyst at the Competitive Enterprise Institute, where he focuses on financial regulation, international development and trade.

    This article was originally published on FEE.org. Read the original article.



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